The American Tax Code

The American Tax code is going to change dramatically. As Americans struggle with all the negative campaign ads about Romney or Obama til Election day and with January 1st,  2013, almost upon us – what action should we be expecting from Washington in regard to the American tax code?

Our tax code is going to change dramatically in ways that seriously impact real estate investors. Commercial and Residential tax codes are set on a trajectory of change that needs to be broadcast to most real estate investors regardless of who wins the Presidential election. All Americans need to be and should be prepared.

Here are some of the ways you can anticipate that our tax code is going to change:

• The Bush tax reductions will expire. No more mortgage interest deduction for homeowners is one dramatic change coming. How will this tax code change affect your family?
• Estate taxes will revert to before-Bush rates – in excess of 50% and only a very low exemption.
• A Medicare 3.8% tax surcharge will be initiated on investment income for people who enjoy modified adjusted gross incomes of $250,000 or more ($200,000 if you are single).
• Long-term capital gains taxes (another major tax code change) will increase  from 15 % to 20%.
• Tax code changes call for income tax rates to increase from a top range of 35% to a top range of 39.6%.
• The tax code changes hidden in the Patient Protection and Affordable Care Act (Obamacare) go into effect.
• People making wage income over $250,000 ($200,000 if you are single) will see an additional 0.9 % hit to their Medicare tax.

If  there is a second  term for Barack Obama and he is able to implement his plans,  you will most likely see these tax code changes happen:

• The Bush tax cuts will be allowed to expire
• Capital gains taxes will  be re-adjusted to 20%.
• The new Obamacare taxes will be in full effect.

Obama’s stated goals indicate that real estate owners can expect to see tax increases and higher energy prices. Commercial net operating incomes will decrease through increased costs of occupancy. Higher energy prices will increase inflation. Inflation will increase higher interest rates, which will in turn result in depressing the value of commercial real estate assets. Both commercial and residential assets will decrease in value under a second term with Barack Obama. Under a first term, we have seen our American Sovereign Credit rating downgraded from AAA+ to AA- and our debt soar to unprecedented levels unseen in all our history as a nation. Under a second term with Barack Obama, America’s tax code is going to change dramatically in the negative.

If  Romney wins a first term, it is forecast that all of the Bush tax cuts will be extended. Romney has indicated that he will delay the initiation of  ”Obamacare” tax increases (by executive order) in anticipation of swift, decisive congressional action. The capital gains and tax environment should remain the same as it is now.

Romney has been a strong proponent of a 20% across the board tax cut. A tax change cut of this magnitude, combined with a pro-business administration will ensure significant economic growth. Growth should push commercial real estate net operating incomes up, adding to property values.  Growth always means upward pressure on interest rates to deal with stock market increases and to aid in keeping a lid on inflation. This plan has been historically and mathematically proven as a successful method to increase economic growth and reduce debt.

This is an historic life or death moment in the history of America - will we continue to spiral downward or begin again, the upward mobility of a prosperous and blessed nation? 

Romney or Obama- our tax code is going to change dramatically to reflect prosperity or poverty. You get to choose – and prepare.

Vote.